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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September~~June 30, ~~2009~~2010

¨	Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from to

Commission file number 000-50557

MARCO COMMUNITY BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Florida

84-1620092

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

1770 San Marco Road

Marco Island, Florida 34145

(Address of Principal Executive Offices)

(239) 389-~~5200~~4300

(Issuer’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Check whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES x¨ NO ¨ x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) YES ¨ NO ¨ * * The registrant has not yet been phased into the interactive data requirements.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date;:

Common stock, par value $.01 per share		3,328,608 shares
(class)		Outstanding at ~~October~~September 3127, ~~2009~~2010

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets –At September 30, 2009 (unaudited) and at December 31, 2008		2
Condensed Consolidated Balance Sheets - At June 30, 2010 (unaudited) and at December 31, 2009		3
Condensed Consolidated Statements of Operations –Three and Nine Months ended September 30, 2009 and 2008 (unaudited)		3-4
Condensed Consolidated Statements of Operations - Three and Six Months ended June 30, 2010 and 2009 (unaudited)		4
Condensed Consolidated Statements of Changes in Stockholders’ Equity –Nine Months ended September 30, 2009 and 2008 (unaudited)		5
Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)		5
Condensed Consolidated Statements of Cash Flows –Nine Months ended September 30, 2009 and 2008 (unaudited)		6-7
Condensed Consolidated Statements of Cash Flows – Three and Six Months ended June 30, 2010 and 2009 (unaudited)		6
Notes to Condensed Consolidated Financial Statements (unaudited)		87-1513
Review by Independent Registered Public Accounting Firm		16
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14-16
Report of Independent Registered Public Accounting Firm		17
Item 4. Controls and Procedures		17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18-25
Item 4. Controls and Procedures		26
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		2718
Item 5. Other Information		2718
Item 6. Exhibits		2818-19
SIGNATURES		2920

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets

($In in thousands, except per share amounts)

	September 30,2009			December 31,2008
	June 30,2010			December 31,2009
	(Unaudited)
Assets
Cash and due from banks	$	3,305		1,587
Cash	$	280		$	315
Federal funds sold		—		7,237
Loan, net of allowance for loan losses of $275 in 2010 and $150 in 2009		1,430			1,660
Interest-bearing deposits		7,431		387
Premises and equipment, net		204			592
Total cash and cash equivalents		10,736		9,211
Other assets		—			8
Securities available for sale		13,925		—
Assets of discontinued operations		—			116,238
Securities held to maturity (fair value of $8,256 at December 31, 2008)		—		8,147
Total assets	$	1,914		$	118,813
Loans held for sale		1,548		—
Liabilities and Stockholders’ Equity
Loans, net of allowance for loan losses of $1,877 in 2009 and $6,154 in 2008		99,915		106,554
Liabilities:
Other real estate owned		3,958		3,202
Other liabilities	$	72		$	146
Premises and equipment, net		3,241		3,357
Liabilities of discontinued operations		—			117,294
Federal Reserve Bank stock, at cost		368		452
Total liabilities		72			117,440
Federal Home Loan Bank stock, at cost		238		262
Stockholders’ equity:
Accrued interest receivable		427		413
Preferred stock, no par value; 1,000,000 shares authorized, 296 shares outstanding		—			—
Deferred income taxes		7,551		5,005
Preferred stock, series B, $51,000 liquidation value; 125 shares authorized, 96 shares outstanding		4,896			4,896
Other assets		212		146
Preferred stock, series C, $7,500 liquidation value, 750 shares authorized, 200 shares outstanding		1,273			1,191
Total assets	$	142,119		136,749
Common stock, $.01 par value; 9,000,000 shares authorized, 3,328,608 shares issued and outstanding		33			33
Liabilities and Stockholders’ Equity
Additional paid-in capital		21,422			21,504
Liabilities:
Accumulated deficit		(25,782	)		(26,369	)
Noninterest-bearing demand deposits		4,944		4,353
Accumulated other comprehensive income		—			118
Savings, NOW and money-market deposits		68,162		34,776
Total stockholders’ equity		1,842			1,373
Time deposits		51,360		76,971
Total liabilities and stockholders’ equity	$	1,914		$	118,813
Total deposits		124,466		116,100
Repurchase agreements		117		931
Official checks		1,667		332
Dividends payable		—		120
Accrued interest payable and other liabilities		584		651
Total liabilities		126,834		118,134
Stockholders’ equity:
Preferred stock, no par value; 1,000,000 shares authorized, 296 shares outstanding		—		—
Preferred stock, series B, $51,000 liquidation value; 125 shares authorized, 96 shares outstanding		4,896		4,896
Preferred stock, series C, $7,500 liquidation value, 750 shares authorized, 200 and 145 shares outstanding, net of discount of $398 and $354		1,102		734
Common stock, $.01 par value; 9,000,000 shares authorized, 3,328,608 and 3,222,608 shares issued and outstanding in 2009 and 2008		33		32
Additional paid-in capital		21,546		21,024
Accumulated deficit		(12,381	)	(8,071	)
Accumulated other comprehensive income		89		—
Total stockholders’ equity		15,285		18,615
Total liabilities and stockholders’ equity	$	142,119		136,749

See Accompanying Notes to Condensed Consolidated Financial Statements.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share amounts)

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	Three Months EndedJune 30,							Six Months EndedJune 30,
	2009			2008			2009			2008
	2010			2009				2010				2009
Interest income:
Interest income (net of reversals)	$	(10	)	$	59			$	27			$	112
Loans	$	1,415		1,648			4,578			5,497
Provision for loan losses		—			—				(125	)			—
Securities		90		133			253			334
Reserve for impairment		—			—				(385	)			—
Other interest-earning assets		8		67			23			339
General and administrative expenses		(38	)		(105	)			(103	)			(171	)
Total interest income		1,513		1,848			4,854			6,170
Loss from continuing operations before income tax benefit		(48	)		(46	)			(586	)			(59	)
Interest expense:
Income tax benefit		—			(17	)			—				(22	)
Deposits		710		951			2,331			3,342
Net loss from continuing operations		(48	)		(29	)			(586	)			(37	)
Other borrowings		1		7			5			23
Gain (loss) from discontinued operations		—			(2,650	)			1,173				(2,851	)
Total interest expense		711		958			2,336			3,365
Net income (loss)		(48	)		(2,679	)			587				(2,888	)
Net interest income		802		890			2,518			2,805
Preferred stock dividends and amortization of preferred stock discount		41			49				82				145
Provision for loan losses		49		150			4,300			3,155
Net income (loss) available to common stockholders	$	(89	)	$	(2,728	)		$	505			$	(3,033	)
Net interest income (expense) after provision for loan losses		753		740			(1,782	)		(350	)
Net income (loss) per common share, basic and diluted, from:
Noninterest income:
Continuing operations	$	(0.02	)	$	(0.01	)		$	(0.18	)		$	(0.01	)
Service charges on deposit accounts		9		7			26			19
Discontinued operations		—			(0.81	)			0.35				(0.88	)
CLCC loan brokerage fees		—		22			—			22
Net income (loss)		(0.02	)		(0.82	)			0.17				(0.89	)
Gain on sale of securities		—		—			82			—
Preferred stock dividends and amortization of preferred stock discount		0.01			0.01				0.02				0.04
Gain on sale of residential mortgage loans		88		—			376			—
Net income (loss) available to common stockholders	$	(0.03	)	$	(0.83	)		$	0.15			$	(0.93	)
Rental income		2		—			9			—
Weighted-average number of shares outstanding, basic and diluted		3,329			3,274				3,329				3,248
Other service charges and fees		8		46			107			124
Dividends per common share	$	—		$	—			$	—			$	—
Total noninterest income		107		75			600			165
Noninterest expenses:
Salaries and employee benefits		745		753			1,883			1,998
Occupancy and equipment		124		148			370			461
Advertising		15		23			59			100
Insurance		12		11			30			53
Data processing		60		63			195			194
Regulatory assessments		140		101			494			300
Telephone		19		16			55			53
Professional fees		145		156			317			411
Stationery and supplies		6		11			24			29
Writedown on other real estate owned		1,662		226			1,742			482
Loss on sale of other real estate owned		164		—			336			—
Other		48		101			223			352
Total noninterest expenses		3,140		1,609			5,728			4,433
Loss before income taxes		(2,280	)	(794	)		(6,910	)		(4,618	)
Income tax benefit		(858	)	(299	)		(2,600	)		(1,738	)
Net loss		(1,422	)	(495	)		(4,310	)		(2,880	)
Preferred stock dividends requirements and amortization of preferred stock discount		17		69			78			205
Net loss available to common shareholders	$	(1,439	)	(564	)		(4,388	)		(3,085	)

(continued)

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited), Continued

(In thousands, except per share amounts)

	Three Months EndedSeptember 30,					Nine Months EndedSeptember 30,
	2009			2008		2009		2008
Net loss per common share, basic and diluted	$	(0.43	)	(0.17	)	(1.35	)	(0.96	)
Weighted-average number of shares outstanding, basic and diluted		3,326		3,223		3,258		3,223
Dividends per common share	$	—		—		—		—

See Accompanying Notes to Condensed Consolidated Financial Statements.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2009~~2010 ~~and 2008~~

(In thousands)

	Series BPreferredStock		Series CPreferredStock		CommonStock		~~AdditionalPaid-InCapital~~	AdditionalPaid-InCapital		~~AccumulatedDeficit~~		AccumulatedDeficit	~~AccumulatedOtherComprehensiveIncome~~		~~TotalStockholders’Equity~~AccumulatedOtherComprehensiveIncome			TotalStockholders’Equity
Balance at December 31, 2007	$	4,896	—		32		20,874			(2,993	)		9		22,818
Balance at December 31, 2009	$	4,896	$	1,191	$	33		$	21,504			$	(26,369	)	$	118		$	1,373
Comprehensive loss:
Comprehensive income:
Net loss (unaudited)		—	—		—		—			(2,880	)		—		(2,880	)
Net income (Unaudited)				—		—			—				635			—
Net change in unrealized gain on security available for sale, net of tax effect (unaudited)		—	—		—		—			—			(8	)	(8	)
Net change in unrealized holding gains on securities (Unaudited)		—		—		—			—				—			(118	)
Comprehensive loss (unaudited)															(2,888	)
Total comprehensive income		—		—		—			—				—			—			517
Share-based compensation (unaudited)		—	—		—		44			—			—		44
Amortization of preferred stock discount (Unaudited)		—		41		—			(41	)			—			—			—
Dividends declared-preferred (unaudited)		—	—		—		(205	)		—			—		(205	)
Balance at March 31, 2010 (Unaudited)		4,896		1,232		33			21,463			$	(25,734	)		—			1,890
Balance at September 30, 2008 (unaudited)	$	4,896	—		32		20,713			(5,873	)		1		19,769
Comprehensive income:
Balance at December 31, 2008	$	4,896	734		32		21,024			(8,071	)		—		18,615
Net loss (Unaudited)				—		—			—				(48	)		—
Comprehensive loss:
Total comprehensive loss		—		—		—			—				—			—			(48	)
Net loss (unaudited)		—	—		—		—			(4,310	)		—		(4,310	)
Amortization of preferred stock discount (Unaudited)		—		41		—			(41	)			—			—			—
Net change in unrealized gain on securities available for sale, net of tax effect (unaudited)		—	—		—		—			—			89		89
Balance at June 30, 2010 (Unaudited)	$	4,896	$	1,273	$	33		$	21,422			$	(25,782	)	$	—		$	1,842
Comprehensive loss (unaudited)															(4,221	)
Exercise of stock warrants (102,000 shares) (unaudited)		—	—		1		381			—			—		382
Dividends declared-preferred (unaudited)		—	—		—		(158	)		—			—		(158	)
Reversal of dividends declared, but not paid (unaudited)		—	—		—		139			—			—		139
Share-based compensation (unaudited)		—	—		—		101			—			—		101
Issuance of preferred stock (57 shares) (unaudited)		—	324		—		103			—			—		427
Conversion of 2 shares of series C preferred stock to 4,000 shares of common stock (unaudited)		—	(15	)	—		15			—			—		—
Amortization of preferred stock discount (unaudited)		—	59		—		(59	)		—			—		—
Balance at September 30, 2009 (unaudited)	$	4,896	1,102		33		21,546			(12,381	)		89		15,285

See Accompanying Notes to Condensed Consolidated Financial Statements.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Nine Months EndedSeptember 30,
	Six Months EndedJune 30,
	2009			2008
	2010			2009
Cash flows from operating activities:
Net loss	$	(4,310	)	(2,880	)
Net income (loss)	$	587		$	(2,888	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		~~149~~3		~~207~~	9
Share-based compensation		101		44
Provision for loan losses		125			—
Provision for loan losses		4,300		3,155
Share-based compensation		—			55
Deferred income tax benefit		~~(2,600~~—	)	~~(1,734~~	)(20	)
Origination of loans held for sale		(20,106	)	—
Impairment of premises and equipment		385			—
Proceeds from loans held for sale		18,981		—
(Gain) loss from discontinued operations		(1,173	)		2,851
Gain on loans held for sale		(423	)	—
Decrease in other assets		8			—
Amortization of loan fees and costs, net		(59	)	30
Decrease in other liabilities		(75	)		(14	)
Net premium amortization		37		—
Net cash used in operating activities		(140	)		(7	)
Gain on sale of securities available for sale		(82	)	—
Cash flows from investing activities:
(Increase) decrease in accrued interest receivable		(14	)	79
Net decrease in loans		105			554
(Increase) decrease in other assets		(66	)	2,170
Investment in subsidiaries		—			(1,850	)
Write down of other real estate owned		1,742		30
Net cash provided by (used in) investing activities		105			(1,296	)
Loss on sale of other real estate owned		336		257
Cash flows from financing activities:
Increase (decrease) in official checks, accrued interest payable and other liabilities		1,268		(757	)
Net proceeds from issuance of preferred stock		—			427
Net cash (used in) provided by operating activities		(746	)	601
Net proceeds from exercise of warrants		—			382
Cash flows from investing activities:
Preferred dividends payable		—			(151	)
Purchase of securities available for sale		(13,239	)	(6,007	)
Net cash provided by financing activities		—			658
Proceeds from calls and maturities of securities available for sale		1,050		957
Net decrease in cash		(35	)		(645	)
Proceeds from sale of securities available for sale		4,283		2,330
Cash at beginning of period		315			883
Principal payment of securities available for sale		2,316		—
Cash at end of period	$	280		$	238
Redemption of Federal Home Loan Bank Stock		24		31
Noncash transactions:
Purchase of Federal Reserve Bank Stock		(25	)	(59	)
Change in net assets of discontinued operations due to net change in accumulated other comprehensive income (loss), net change in unrealized gain (loss) on securities available for sale, net of tax	$	(118	)	$	44
Redemption of Federal Reserve Bank stock		109		62
Net (increase) decrease in loans		(3,042	)	12,171
Proceeds from sale of other real estate owned		2,606		1,186
Purchase of premises and equipment		(33	)	(248	)
Net cash (used in) provided by investing activities		(5,951	)	10,423
Cash flows from financing activities:
Net increase (decrease) in deposits		8,366		(11,754	)
Net (decrease) increase in repurchase agreements		(814	)	97
Net proceeds from issuance of preferred stock		427		—
Net proceeds from exercise of warrants		382		—
Preferred dividends paid		(139	)	(217	)
Net cash provided by (used in) financing activities		8,222		(11,874	)
Net increase (decrease) in cash and cash equivalents		1,525		(850	)
Cash and cash equivalents at beginning of period		9,211		11,174
Cash and cash equivalents at end of period	$	10,736		10,324

~~(continued)~~See Accompanying Notes to Condensed Consolidated Financial Statements.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements ~~of Cash Flows~~ (Unaudited), ~~Continued~~

~~(In~~NOTE ~~thousands)~~1. Description of Business and Basis of Presentation

	Nine Months EndedSeptember 30,
	2009		2008
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	2,434	3,489
Income taxes	$	—	(2,116	)
Noncash transactions:
Preferred dividends payable at beginning of period	$	120	35
Preferred dividends payable at end of period	$	—	23
Amortization of preferred stock discounts	$	59	—
Transfer of loans to other real estate owned	$	5,440	1,432
Net change in unrealized gain on security available for sale, net of tax effect	$	89	(8	)
Transfer of securities held to maturity to available for sale	$	8,147	—

General. Marco Community Bancorp, Inc. (the “MCBI”), which was incorporated on January 28, 2003, owns 100% of the outstanding common stock of Marco Community Bank (the “Bank”) and Commercial Lending Capital Corp. (“CLCC”) (formerly MCB Commercial Lending Corp.) (collectively, the “Company”). MCBI’s only business activities were the operation of the Bank and CLCC. The Bank was a state (Florida) chartered commercial bank. The Bank offered a variety of community banking services to individual and corporate customers through its banking office located in Marco Island, Florida. The deposits of the Bank were insured by the Federal Deposit Insurance Corporation. CLCC was incorporated to provide commercial loans to customers that would otherwise seek financing elsewhere because of credit limit constraints. Effective December 31, 2008, CLCC’s operations were suspended due to economic conditions.

~~See~~The ~~Accompanying~~amounts ~~Notes~~presented toin the Condensed Consolidated Statements ~~Financial~~of ~~Statements~~Operations (unaudited) in this report reflect the interim operations of the Bank from January 1, 2010 through the closure of the Bank by the FDIC on February 19, 2010, as a single line item gain (loss) from discontinued operations.

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (consisting principally of normal recurring accruals) necessary to present fairly the financial position at June 30, 2010, and the results of operations and cash flows for the three and six month periods ended June 30, 2010 and 2009. The results of operations for the three and six month periods ended June 30, 2010, are not necessarily indicative of the results to be expected for the year ending December 31, 2010.

Regulatory Action. On February 19, 2010, the Bank was closed by the Florida Office of Financial Regulation (“OFR”) and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver of the Bank. Subsequent to the closure, Mutual of Omaha Bank, Nebraska (“Mutual of Omaha”) assumed all of the deposits of the Bank and purchased essentially all of the Bank’s assets in a transaction facilitated by the FDIC. On February 20, 2010, the one office of the Bank reopened as a branch of Mutual of Omaha.

The Company’s principal asset was the capital stock that it owns in the Bank, and, as a result of the closure of the Bank, the Company has minimal remaining tangible assets. The Company did not realize any recovery following the closing of the Bank and sale of its assets by the FDIC, nor is any recovery expected. Since the closing of the Bank, the principal assets of the Company are its office condominium, a participation in a loan receivable, and cash.

Going Concern. The closing of the Bank on February 19, 2010, was due to continuing increases in nonperforming assets, declining net interest margin, continuing high levels of operating expenses related to the credit problems and eroding regulatory capital. The closing raises substantial doubt about the Company’s ability to continue as a going concern. Management evaluated and was involved in on-going negotiations for all potential alternative sources of capital to meet the Bank’s capital requirements, including equity investors, a sale or merger of the Company or Bank, and recapitalization opportunities, but was unable to obtain capital to meet the Bank’s capital requirements resulting in the closure of the Bank.

Subsequent to the Bank’s closure, the Company began exploring methods of winding up its operations. Any ultimate distribution of assets will occur in accordance with Florida law, the Company’s Articles of Incorporation, and the terms of the Company’s outstanding series of Preferred Stock.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

NOTE 1. Description of Business and Basis of Presentation (Continued)

~~General.~~Discontinued ~~Marco Community Bancorp, Inc~~Operations. ~~(the~~As ~~“Holding~~noted ~~Company”) which was incorporated on January 28~~above, ~~2003~~our ~~owns~~primary ~~100%~~business ofsegment ~~the~~– ~~outstanding common stock of Marco Community Bank (~~the “Bank~~”) and Commercial Lending Capital Corp.~~ ~~(“CLCC”)~~– ~~(collectively~~was ~~the~~closed ~~“Company”).~~by ~~The Holding Company’s only business activity is~~ the ~~operation~~OFR ofand ~~the~~FDIC ~~Bank~~on ~~and~~February 19, ~~CLCC~~2010. The ~~Bank~~following is a ~~state~~summary ~~(Florida) chartered commercial bank. The Bank offers a variety~~ of ~~community banking~~the ~~services~~disclosures tofor ~~individual~~the ~~and~~discontinued ~~corporate~~operations ~~customers through its banking office located in Marco Island, Florida. The deposits~~ of the Bank ~~are~~(in ~~insured~~thousands): up to the applicable limits by the Federal Deposit Insurance Corporation. CLCC was incorporated to provide commercial loans to customers that would otherwise seek financing elsewhere because of credit limit constraints. Effective December 31, 2008, CLCC’s operations were suspended due to economic conditions.

InA ~~the~~summary ~~opinion~~ of ~~management,~~ the accompanying condensed consolidated financial statements contain all adjustments (consisting principally of normal recurring accruals) necessary to present fairly the financial position at September 30, 2009, the results of operations ~~for~~of the ~~three-~~discontinued ~~and~~Bank ~~nine-month periods ended September 30, 2009 and 2008 and cash flows~~ for the ~~nine month periods ended September 30, 2009 and 2008. The results of operations for the~~ three- and ~~nine-~~six ~~month~~months ~~periods~~ ended ~~September~~June 30, 2009 ~~are~~(in ~~not~~thousands): ~~necessarily indicative of the results to be expected for the year ending December 31, 2009.~~

Management has evaluated events occurring subsequent to the balance sheet date through November 13, 2009 (the financial statement issuance date), determining no events require additional disclosure in these consolidated condensed financial statements.


	Three Months Ended June 30, 2009			Six Months Ended June 30, 2009

Interest income	$	1,598		$	3,230
Interest expense		808			1,626

Net interest income		790			1,604
Provision for loan losses		4,121			4,251

Net interest income after provision for loan losses		(3,331	)		(2,647	)
Noninterest income		206			342
Noninterest expenses		1,125			2,266

Loss before income taxes		(4,250	)		(4,571	)
Income tax benefit		(1,600	)		(1,720	)

Net loss		(2,650	)		(2,851	)
Dividends on preferred stock		—			—

Net loss available to common stockholders	$	(2,650	)	$	(2,851	)

2.A ~~Loan~~summary ~~Impairment~~of the assets, liabilities, and ~~Loan~~stockholder’s equity of the discontinued Bank as of December 31, 2009 ~~Losses~~(in thousands):

Impaired collateral dependent loans were as follows (in thousands):


Assets
Cash and due from banks	$	1,194
Interest-bearing deposits		792

Total cash and cash equivalents		1,986
Securities available for sale		10,493
Loans held for sale		3,199
Loans, net of allowance for loan losses of $6,828		93,972
Other real estate owned		2,761
Premises and equipment, net		2,611
Federal Reserve Bank stock, at cost		368
Federal Home Loan Bank stock, at cost		238
Accrued interest receivable		444
Other assets		166

Total assets	$	116,238

	Three Months EndedSeptember 30,			Nine Months EndedSeptember 30,
	2009		2008	2009	2008
Balance at end of period	$	7,989	10,925	7,989	10,925
Total related allowance for losses		—	3,821	—	3,821
Net investment in impaired loans	$	7,989	7,104	7,989	7,104
Average investment in impaired loans	$	7,975	11,118	8,263	10,655
Interest income recognized on impaired loans	$	—	—	—	102
Interest income received on impaired loans	$	—	—	—	—

At September 30, 2009, the Company had $9.2 million in nonaccrual loans and no loans which were over ninety days past due and still accruing interest. At September 30, 2008, the Company had $12.9 million in nonaccrual loans and no loans which were ninety days past due but still accruing interest.

(continued)

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), —(Continued)

2NOTE 1. ~~Loan~~Description ~~Impairment~~of Business and ~~Loan~~Basis ~~Losses,~~of Presentation (Continued)

The activity in the allowance for loan losses follows (in thousands):


Liabilities and Stockholder’s Equity
Liabilities:
Noninterest-bearing demand deposits	$	9,281
Savings, NOW and money-market deposits		63,287
Time deposits		44,215

Total deposits		116,783
Repurchase agreements		118
Accrued interest payable and other liabilities		393

Total liabilities		117,294


Stockholder’s equity (deficit):
Common stock, $.01 par value		3,200
Additional paid-in capital		19,300
Accumulated deficit		(23,674	)
Accumulated other comprehensive income		118

Total stockholder’s deficit		(1,056	)

Total liabilities and stockholder’s equity	$	116,238

	Three Months EndedSeptember 30,					Nine Months EndedSeptember 30,
	2009			2008		2009		2008
Beginning balance	$	6,104		6,050		6,154		3,794
Recoveries		261		—		333		—
Charge-offs		(4,537	)	(531	)	(8,910	)	(1,280	)
Provision for loan losses		49		150		4,300		3,155
Ending balance	$	1,877		5,669		1,877		5,669

For the six-month period ended June 30, 2010, we have reported the operations of MCBI only and the gain from discontinued operations of the Bank. Following the closure of the Bank, the OFR and FDIC seized all records of the Bank and we have been unable to obtain the results of the operations of the Bank from January 1, 2010 to February 19, 2010. Management of the Company believes the time and cost involved in trying to obtain or reconstruct this interim information for 2010 would not be beneficial or meaningful to the shareholders of the Company.

AtNOTE ~~September 30, 2009 the Company has one loan pool with an original term of one year. At September 30, 2009, $16,000 was outstanding compared to $~~2.0 ~~million~~Loan atImpairment ~~December 31, 2008. For the nine-months ended September 30, 2009, the Company charged-off $1.5 million of these loan pool, recognized $198,000 in proceeds from sale~~ and ~~recorded~~Loan anLosses ~~additional $261,000 in loss on sale.~~

3.Impaired ~~Nonperforming~~collateral ~~Assets~~dependent loans were as follows (in thousands):

Nonperforming assets include nonaccrual loans and other real estate owned. Nonaccrual loans represent loans of which interest accruals have been discontinued.


	June 30, 2010			December 31, 2009

Balance at end of period	$	1,705		$	1,810
Total related allowance for losses		(275	)		(150	)


Net investment in impaired loan	$	1,430		$	1,660


	Six Months Ended June 30, 2010			Year Ended December 31, 2009

Average net investment in impaired loan	$	1,545		$	2,000

Interest income received and recognized on impaired loan	$	27		$	174

The Company discontinues interest accruals when principal or interest is due and has remained unpaid for ninety days. When a loan is placed on nonaccrual status, all unpaid interest is reversed. Nonaccrual loans may not be restored to accrual status unless they have a sustained history of repayments in addition to the repayment of all delinquent principal and interest. At September 30, 2009 and 2008, the Company had no loans which were over ninety days past due and still accruing interest.

Nonperforming loans are closely monitored on an ongoing basis as part of the Company’s loan review and work-out process. The potential risk of loss on these loans is evaluated by comparing the loan balance to the fair value of any underlying collateral or the present value of projected future cash flows. Losses are recognized where appropriate.

Following is a summary of nonperforming assets (in thousands):

	September 30,
	2009		2008
Nonaccrual loans	$	9,205	12,881
Other real estate owned		3,958	2,816
Total nonperforming assets	$	13,163	15,697

(continued)

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), —(Continued)

3NOTE 2. ~~Nonperforming~~Loan ~~Assets,~~Impairment and Loan Losses (Continued)

~~Asset~~The ~~quality~~Company’s ~~ratios:~~only outstanding loan at June 30, 2010 and December 31, 2009 (exclusive of the discontinued Bank), is one participation loan with Mutual of Omaha. The loan was an accrual loan at December 31, 2009, but became a nonaccrual loan during the second quarter of 2010 due to principal payments falling more than ninety days past due. All accrued interest was reversed during the quarter ended June 30, 2010, which resulted in a net reduction in interest income of $10,000.

	September 30,
	2009		2008
Nonperforming loans as a percent of total loans	9.04	%	11.43	%
Nonperforming assets as a percent of total assets	9.31	%	11.48	%

The activity in the allowance for loan losses follows (in thousands):

4. Other Real Estate Owned


	Three Months Ended June 30, 2010		Six Months Ended June 30, 2010		Year Ended December 31, 2009

Beginning balance	$	275	$	150	$	150
Recoveries		—		—		—
Charge-offs		—		—		—
Provision for loan losses		—		125		—


Ending balance	$	275	$	275	$	150

~~Other~~NOTE ~~real estate owned (“OREO”) is comprised of real estate properties obtained in partial or total satisfaction of loan obligations~~3. AtNonperforming ~~September 30,~~Assets 2009, OREO totaled $4.0 million which was comprised of one residential real estate lot obtained from the loan pools held for an average of ten months, thirty-eight residential real estate lots held for an average of eleven months, eleven residential properties held for an average of twelve months and one commercial property held for an average of seven months and recorded at estimated fair value less estimated selling costs. Changes in the value subsequent to transfer are recorded in noninterest expense along with direct operating expenses. Gains or losses not previously recognized resulting from the sale of OREO is recognized in noninterest expense on the date of sale. During the nine-months ended September 30, 2009, the Company, recorded $2.6 million in proceeds from sales which resulted in a $336,000 loss.

AtNonperforming ~~the~~assets ~~time~~include ofnonaccrual ~~booking~~loans. ~~OREO,~~Nonaccrual ~~the~~loans ~~Bank~~represent ~~orders~~loans ~~a current appraisal and books OREO at the lower~~ of ~~the~~which ~~carrying~~interest ~~value~~accruals orhave ~~the~~been ~~fair market value less the cost to sell~~discontinued. ~~OREO~~Restructured isloans ~~actively~~are loans ~~marketed by professional real estate individuals~~ in anwhich ~~attempt~~the toborrower ~~sell~~has ~~parcels~~been atgranted ~~their~~a ~~current~~concession ~~market~~on ~~value.~~the ~~The~~interest ~~Company~~rate isor ~~exposed to~~ the ~~weakening~~original ~~real estate~~repayment ~~conditions~~terms indue ~~the~~to ~~Florida~~financial ~~markets~~distress. ~~including~~At ~~Orlando~~June 30, ~~Naples,~~2010 ~~Fort Myers~~ and ~~Tampa.~~December 31, ~~With the general economic downturn~~2009, the Company ~~may~~(exclusive ~~not~~of ~~be able to sell its OREO property at~~ the ~~current~~discontinued ~~market~~Bank) ~~value~~did ~~and~~not ~~may experience an increase in losses~~have onany ~~the~~restructured ~~sale of OREO~~loans.

5The Company discontinues interest accruals when principal or interest is due and has remained unpaid for ninety days. When ~~Loss~~a ~~Per~~loan ~~Common~~is ~~Share~~placed on nonaccrual status, all unpaid interest is reversed. Nonaccrual loans may not be restored to accrual status unless they have a sustained history of repayments in addition to the repayment of all delinquent principal and interest. At December 31, 2009, the Company (exclusive of the discontinued Bank) had no loans which were over ninety days past due and still accruing interest. At June 30, 2010, the loan participation held by the Bank was in nonaccrual status.

~~Loss~~Nonperforming ~~per~~loans ~~share~~are ofclosely ~~common~~monitored ~~stock~~on ~~has~~an ~~been~~ongoing ~~computed~~basis onas ~~the~~part ~~basis~~ of the ~~weighted-average~~Company’s ~~number~~loan ofreview ~~shares~~and ofwork-out ~~common~~process. ~~stock~~The potential ~~outstanding.~~risk ~~Outstanding~~of ~~stock~~loss ~~options~~on ~~and~~these ~~convertible~~loans ~~preferred~~is ~~stock~~evaluated ~~are~~by ~~not considered~~comparing ~~dilutive~~the ~~securities~~loan ~~for~~balance to the ~~three-~~fair ~~and~~value ~~nine-month~~of ~~periods~~any ~~ended~~underlying ~~September 30,~~collateral ~~2009~~or ~~and~~the ~~2008~~present ~~due~~value toof ~~the~~projected ~~net~~future ~~losses~~cash ~~incurred~~flows. byLosses ~~the~~are ~~Company~~recognized where appropriate.

The Company (~~continued~~exclusive of the discontinued Bank) had no nonperforming assets at December 31, 2009. The one loan participation receivable was a nonperforming asset at June 30, 2010.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), —(Continued)

6NOTE 4. ~~Regulatory~~Impairment ~~Capital~~of Long-Lived Assets and Other Real Estate Owned

Impairment of Long-Lived Assets. Long-lived assets, such as premises and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The ~~Bank~~Company isassesses ~~required~~the torecoverability ~~maintain~~of ~~certain~~long-lived ~~minimum~~assets ~~regulatory~~by ~~capital~~determining ~~requirements~~whether the assets can be recovered from undiscounted future cash flows. Recoverability Atof ~~September 30~~long-lived assets is dependent upon, ~~2009~~among other things, the ~~Bank~~Company’s ~~was~~ability ~~considered~~to ~~less~~maintain ~~than~~profitability, ~~adequately~~so ~~capitalized~~as to be able to meet its obligations when they become due. ~~The~~During ~~following~~the isfirst aquarter ~~summary~~of at2010, the Company recorded an ~~September~~impairment charge to operations of its office condominium totaling $385,000. At June 30, ~~2009~~2010, the carrying value of the ~~regulatory~~office ~~capital~~condominium ~~requirements:~~was $204,000, net of accumulated depreciation.

	Actual		AdequatelyCapitalized		WellCapitalized
Total capital to risk-weighted assets	6.90	%	8.00	%	10.00	%
Tier 1 capital to risk-weighted assets	5.68	%	4.00	%	6.00	%
Tier 1 capital to total assets - leverage ratio	3.76	%	4.00	%	5.00	%

Other real estate owned (“OREO”). OREO is comprised of real estate properties obtained in partial or total satisfaction of loan obligations When the FDIC was named as receiver of the Bank, all OREO owned by the Company was transferred to Mutual of Omaha and/or the FDIC.

7Before the Bank was closed, at the time of booking OREO, the Company ordered a current appraisal and booked OREO at the lower of the carrying value or the fair market value less the cost to sell. ~~Share-Based~~OREO ~~Compensation~~was actively marketed by professional real estate individuals in an attempt to sell parcels at their current market value. The Company is exposed to the weakening real estate conditions in the Florida markets including Orlando, Naples, Fort Myers, and Tampa. With the general economic downturn, the Company was not always able to sell its OREO property at the current market value and as a result experienced an increase in OREO.

InNOTE ~~2004, the Company adopted three stock option plans~~5. ~~The~~Net ~~Employees’~~Income ~~Stock~~(Loss) ~~Option~~Per ~~Plan~~Common isShare for the benefit of officers and other key employees of the Holding Company, the Bank and CLCC. Stock options are granted at an exercise price equal to or greater than the fair market value of the common stock on the date of grant. These options have ten year terms and vest 20% a year over a five year period.

~~The~~Net ~~Directors’~~income ~~Stock~~(loss) ~~Option~~per ~~Plan~~share isof ~~for~~common ~~the~~stock ~~benefit~~has ofbeen ~~directors~~computed ofon the ~~Holding~~basis ~~Company,~~of the ~~Bank~~weighted-average ~~and~~number ~~CLCC~~of shares of common stock outstanding. Outstanding ~~Stock~~stock options and convertible preferred stock are ~~granted~~not atconsidered andilutive ~~exercise price~~securities ~~equal~~for the six months ended June 30, 2010, due to orthe exercise price being greater than the ~~fair~~average market ~~value~~price of the Company’s common stock, and onfor the ~~date~~three ofand ~~grant.~~six ~~These~~months ~~options~~ended ~~have~~June 30, ~~ten~~2009, ~~year~~and ~~terms~~three ~~and~~months ~~have~~ended ~~various~~June 30, ~~vesting~~2010, ~~schedules~~due to the net loss incurred by the Company.

~~The~~NOTE ~~Advisory Directors’ Stock Option Plan is for the benefit of advisory directors of the Company~~6. ~~Stock~~Share-Based ~~options~~Compensation are granted at an exercise price equal to or greater than the fair market value of the common stock on the date of grant. These options have six year terms and begin vesting one year after the date of grant at 25% a year over a four year period.

Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB Statement No. 123(~~continued~~R), Share-Based Payment (“SFAS 123(R)”), using the modified-prospective-transition method. Under that transition method, compensation cost recognized includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value calculated in accordance with the original provisions of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123(R). The directors advisory stock option plan is being expensed over the vesting period based on the fair value of the option on the date the options become fully vested. The Company recognizes stock-based compensation expense in salaries and employee benefits in the accompanying condensed consolidated statements of operations on an accelerated basis over the vesting period.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), —(Continued)

7NOTE 6. Share-Based Compensation, (Continued)

~~The~~In 2004, the Company adopted three stock option plans. ~~were~~The ~~amended~~Employees’ inStock ~~2007~~Option toPlan ~~increase~~is for the benefit ~~size~~ of ~~the~~officers ~~three~~and ~~Company~~other ~~plans~~key soemployees ~~that~~of MCBI, the ~~number~~Bank ~~of shares~~and ofCLCC. ~~common~~Stock ~~stock~~options ~~reserved~~are ~~for~~granted ~~issuance~~at ~~under~~an ~~all~~exercise ~~three~~price ~~Company~~equal ~~plans~~to isor agreater ~~collective~~than ~~amount~~the ~~equal~~fair tomarket ~~15%~~value of the common stock ~~outstanding,~~on upthe todate ~~a maximum~~ of ~~1,500,000 shares~~grant. AtThese ~~September 30,~~options ~~2009,~~have anten ~~aggregate~~year ofterms ~~37,618~~and vest ~~options~~20% ~~remain available~~a ~~for~~year ~~grant~~over ina ~~all~~five ~~three~~year ~~plans~~period.

AThe ~~summary~~Directors’ ofStock ~~the~~Option ~~plans~~Plan is asfor ~~follows~~the ~~(in~~benefit ~~thousands~~of directors of MCBI, ~~except~~the ~~for~~Bank ~~share~~and CLCC. Stock options are granted at an exercise price equal to or greater than the fair market value of the common stock on the date of grant. These options have ten year terms and ~~per~~have ~~share~~various ~~information):~~ vesting schedules.

	NumberofShares		Weighted-Average PerShareExercisePrice		Weighted-AverageRemainingContractualTerm	AggregateIntrinsicValue
The Employees’ Plan:
Options outstanding at December 31, 2008	219,750		$	6.01
Options granted	30,000			4.11
Options forfeited	(46,750	)		8.70
Options outstanding at September 30, 2009	203,000		$	5.11	8.53	$	—
Options exercisable at September 30, 2009	59,700		$	6.19	7.52	$	—
The Directors’ Plan:
Options outstanding at December 31, 2008	90,000			7.12
Options granted	26,250			4.18
Options forfeited	(37,500	)		5.99
Options outstanding at September 30, 2009	78,750		$	6.68	7.74	$	—
Options exercisable at September 30, 2009	28,500		$	7.23	5.52	$	—
The Advisory Directors’ Plan:
Options outstanding at December 31, 2008	20,814			8.57
Options granted	10,000			4.16
Options forfeited	(5,438	)		8.34
Options outstanding at September 30, 2009	25,376		$	6.88	3.29	$	—
Options exercisable at September 30, 2009	12,366		$	7.63	1.24	$	—

The Advisory Directors’ Stock Option Plan is for the benefit of advisory directors of the Company. Stock options are granted at an exercise price equal to or greater than the fair market value of the common stock on the date of grant. These options have six year terms and begin vesting one year after the date of grant at 25% a year over a four year period.

~~There~~The plans were noamended ~~options~~in ~~exercised~~2007 ~~during~~to increase the ~~nine-months~~size ~~ended~~of ~~September 30,~~the ~~2009.~~three ~~At September 30,~~Company ~~2009,~~plans ~~there~~so ~~was~~that ~~$296,000~~the number of ~~total~~shares ~~unrecognized~~of ~~compensation~~common ~~expense~~stock ~~related~~reserved tofor ~~nonvested~~issuance ~~share-based compensation arrangements granted~~ under all ~~the~~three Company plans. ~~The cost~~ is ~~expected to be recognized over~~ a ~~period~~collective ofamount ~~4.7~~equal ~~years.~~to ~~The~~15% ~~total fair value~~ of ~~shares~~the ~~vested~~common ~~and~~stock ~~recognized as compensation expense was $101~~outstanding,~~000~~ ~~for~~up ~~the~~to ~~nine-month~~a ~~period~~maximum ~~ended~~of ~~September 30~~1, ~~2009~~500,000 ~~and a $33,500 income tax benefit was recognized~~shares.

~~(continued)~~Given the limited assets that are expected to be available upon liquidation of the Company, the Company does not anticipate that any additional options will be granted or exercised and none were granted or exercised during the six months ended June 30, 2010. Due to the effect of forfeitures, no compensation expense was incurred during the six months ended June 30, 2010, and none is expected to be incurred in future periods.

A summary of the stock options plans and assumptions used to calculate the fair value of the options granted have been omitted from this report since no options were granted or exercised during the six months ended June 30, 2010, and none are expected to be granted in future periods.

NOTE 7. Fair Value Measurements

The Company (exclusive of the discontinued Bank) had no assets subject to fair value measurements on a recurring basis at June 30, 2010 or December 31, 2009. Assets measured at fair value on a nonrecurring basis at June 30, 2010 and December 31, 2009, are summarized as follows (in thousands):


	June 30, 2010								Losses		Losses Recorded in Operations During 2010
	Total		(Level 1)		(Level 2)		(Level 3)

Loan	$	1,430	$	—	$	—	$	1,430	$	275	$	125
Premises and equipment	$	204	$	—	$	—	$	204	$	385	$	385

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), —(Continued)

NOTE 7. ~~Share-Based~~Fair ~~Compensation,~~Value Measurements (Continued)

There were no options granted during the three-months ended September 30, 2009. The fair value of each option granted for the three- and nine-months ended September 30, 2008 and the nine-months ended September 30, 2009 are estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions ($ in thousands):


	December 31, 2009								Losses		Losses Recorded in Operations During 2009
	Total		(Level 1)		(Level 2)		(Level 3)

Loan	$	1,660	$	—	$	—	$	1,660	$	150	$	—

	Three Months EndedSeptember 30,2008			Nine Months EndedSeptember 30,
				2009		2008
Weighted-average risk-free interest rate		3.82	%	4.18	%	3.91	%
Weighted-average dividend yield		—	%	—	%	—	%
Weighted-average expected stock volatility		6.42	%	10.12	%	6.42	%
Expected life in years		6.5 years		6.2 years		6.5 years
Per share weighted-average grant-date fair value of options issued during the period	$	1.53		1.11		1.53

The estimated carrying amounts and fair values of the Company’s financial instruments were as follows (in thousands):

The Company examined its historical pattern of option exercises in an effort to determine if there were any pattern based on certain employee populations. From this analysis, the Company could not identify any patterns in the exercise of options. As such, the Company used the guidance in Staff Accounting Bulletin No. 107 to determine the estimated life of options issued. Expected volatility is based on a peer group of the Company. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The dividend yield assumption is based on the Company’s history and expectation of dividend payments.


	At June 30, 2010				At December 31, 2009
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	280	$	280	$	315	$	315

Loans, net	$	1,430	$	1,430	$	1,660	$	1,660

Accrued interest receivable	$	—	$	—	$	8	$	8


Financial liabilities:	$	—	$	—	$	—	$	—


Off-balance sheet financial instruments	$	—	$	—	$	—	$	—

NOTE 8. ~~Fair~~Preferred ~~Value~~Stock ~~Measurements~~

~~Our~~The ~~listing~~Company has issued ninety-six shares of ~~assets~~Series ~~subject~~B toPreferred ~~fair~~Stock ~~value~~(“Series ~~measurements~~B onPreferred Stock”). The shares have no voting rights, but have a liquidation ~~recurring~~preference ~~basis~~value of $51,000 per share. Cash dividends are aspayable ~~follows~~in (arrears within the first ten days of each March and September. The dividends are not cumulative, are payable semiannually at an annual rate of $2,900 and are prorated for any partial period. At the Company’s discretion, on any dividend payment date occurring at least two years after issuance, each share of the Series B Preferred Stock is mandatorily convertible into 6,000 shares of common stock; provided, however, that the Company may also convert the Series B Preferred Stock upon any changes in ~~thousands):~~control.

			Fair Value Measurements at Reporting Date Using
	Fair Valueas ofSeptember 30,2009		Quoted PricesIn ActiveMarkets forIdenticalAssets(Level 1)	SignificantOtherObservableInputs(Level 2)	SignificantUnobservableInputs(Level 3)
Available for sale securities	$	13,925	—	13,925	—

On November 20, 2008, the Company commenced a private placement offering of units of its Series C Preferred Stock (“Series C Preferred Stock”) and warrants to purchase common stock (“Warrants”). The offering closed on February 28, 2009. Each unit was comprised of: (1) one share of Series C Preferred Stock, which is convertible into 2,000 shares of common stock; and (ii) one Warrant to purchase 2,000 shares of common stock. The Series C Preferred Stock has no voting rights, but does have a liquidation preference value of $7,500 per share. Semiannual cash dividends of $157.50 per share are payable in arrears and are not cumulative or payable at any time when the Bank would not be considered “well capitalized” or “adequately capitalized” after payment of such dividends. At June 30, 2010, 200 shares of Series C Preferred Stock and 151 warrants to purchase common shares are outstanding. These warrants to purchase 302,000 shares of common stock have an exercise price of $4.50 and $5.25 on or before December 31, 2010 and December 31, 2011, respectively.

~~(continued)~~The Company has not declared or paid any preferred stock dividends since 2009.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

8. Fair Value Measurements, Continued

Assets measured at fair value on a nonrecurring basis are summarized below (in thousands):

	Net Carrying Value at September 30, 2009					TotalLosses	LossesRecordedin OperationsDuring2009
	Total		Level 1	Level 2	Level 3
Impaired loans (1)	$	4,219	—	—	4,219	4,102	3,847
Other real estate owned	$	3,958	—	—	3,958	1,242	1,242

(1) In addition, loans with a carrying value of $3.8 million were measured for impairment using Level 3 inputs and had a fair value in excess of carrying value.

The estimated fair values of the Company’s financial instruments were as follows (in thousands):

	At September 30, 2009			At December 31, 2008
	CarryingAmount		FairValue	CarryingAmount	FairValue
Financial assets:
Cash and cash equivalents	$	10,736	10,736	9,211	9,211
Security available for sale	$	13,925	13,925	—	—
Securities held to maturity	$	—	—	8,147	8,256
Loans held for sale	$	1,548	1,605	—	—
Loans, net	$	99,915	102,107	106,554	107,777
Accrued interest receivable	$	427	427	413	413
Federal Reserve Bank stock	$	368	368	452	452
Federal Home Loan Bank Stock	$	238	238	262	262
Financial liabilities:
Deposits	$	124,466	124,762	116,100	116,794
Repurchase agreements	$	117	117	931	931
Off-balance sheet financial instruments	$	—	—	—	—

9. Preferred Stock

On February 28, 2009, Marco Community Bancorp, Inc. (the “Company”) completed an offering of its Series C Preferred Stock (“Preferred Stock”) and warrants to purchase 290,000 shares of common stock (“Warrants”) by issuing 202 shares of the Preferred Stock and Warrants (the “Units”). These warrants have an exercise price of $3.75, $4.50 and $5.25 on or before December 31, 2009, 2010 and 2011, respectively. The offering raised $1,515,000 in gross proceeds, at an offering price of $7,500 per Unit. Directors of the Company and/or its subsidiaries purchased in excess of 53% of the shares sold.

(continued)

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

9. Preferred Stock, Continued

In 2007, the Company issued ninety-six shares of Series B Preferred Stock (“Preferred Stock”). The shares have no voting rights, but have a liquidation preference value of $51,000 per share. Cash dividends are payable in arrears within the first ten days of each March and September. The dividends are not cumulative, are payable semiannually at an annual rate of $2,900 per share and are prorated for any partial period. At the Company’s discretion, on any dividend payment date occurring at least two years after issuance, each share of Preferred Stock is mandatorily convertible into 6,000 shares of common stock; provided, however, that the Company may also convert the Preferred Stock upon any change in control.

10. Deferred Tax Asset

The Company has recorded a deferred tax asset to recognize the future income tax benefit of operating losses incurred for tax years 2009, 2008 and 2007. Management believes that the tax benefits on the net operating loss carry forwards will be utilized when the Company returns to profitability. The net operating losses can be carried forward for up to 20 years and do not begin to expire until 2027. Management believes that based on its realistic forecast and five year budget, the Company will return to profitability beginning in 2010.

Management considered the cumulative losses in 2009, 2008 and 2007 when determining whether or not to place a valuation allowance on the deferred tax asset. The economic conditions and the Company’s level of nonperforming assets were taken into consideration as well.

However, management believed that the negative evidence was outweighed by certain positive evidence. The Company has a prior history of earnings outside of the recent losses and believes that changes have been made to allow the Company to return to an earnings position: payroll has been reduced; operating costs have been reduced for a substantial savings; and loan pools that were the direct cause of a substantial amount of the cumulative losses experienced over the last three years have been isolated and for the most part have been written-off. Based on the above analysis, management believes it is more likely than not that the Company would realize the deferred tax asset through future operating income.

11. Written Agreement

On August 14, 2007, the Bank entered into a Written Agreement with the Federal Reserve Bank of Atlanta (“FRB”) and the Florida Office of Financial Regulation (“OFR”). The purpose of the Written Agreement is for the Bank to address the FRB’s and OFR’s supervisory and regulatory concerns primarily related to the volume of certain loan pools which are described elsewhere in this Form 10-Q, as well as other loan quality issues. Since entering into the Written Agreement, the Company has made certain material changes to its operations. These changes include: confining its lending activities to Collier County; increasing the level of detail and analysis contained in its loan underwriting files; restructuring its loan policy and methodology for determining its allowance for loan losses; broadening marketing efforts to utilize more forms of media and to emphasize increased community involvement; cross-training employees to increase their skill sets and better serve the Company’s customers; and increasing lobby hours for the convenience of customers.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Review by Independent Registered Public Accounting Firm

Hacker, Johnson & Smith PA, the Company’s independent registered public accounting firm, have made a limited review of the financial data as of September 30, 2009, and for the three- and nine-month periods ended September 30, 2009 and 2008 presented in this document, in accordance with standards established by the Public Company Accounting Oversight Board.

Their report furnished pursuant to Article 10 of Regulation S-X is included herein.

Report of Independent Registered Public Accounting Firm

Marco Community Bancorp, Inc.

Marco Island, Florida:

We have reviewed the accompanying interim condensed consolidated balance sheet of Marco Community Bancorp, Inc. and Subsidiaries (the “Company”) as of September 30, 2009, the related interim condensed consolidated statements of operations for the three- and nine-month periods ended September 30, 2009 and 2008 and the related interim condensed consolidated statements of cash flows and changes in stockholders’ equity for the nine-month periods ended September 30, 2009 and 2008. These interim condensed financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim condensed consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet of the Company as of December 31, 2008, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated March 26, 2009, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2008, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Hacker, Johnson & Smith PA HACKER, JOHNSON & SMITH PA Tampa, Florida November 13, 2009

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Comparison of ~~September~~June 30, ~~2009~~2010 and December 31, ~~2008~~2009

General

Marco Community Bancorp, Inc. (~~the~~ “~~Holding Company~~MCBI”), ~~which~~ was incorporated under the laws of the State of Florida on January 28, 2003, ~~owns~~for ~~100% of~~ the ~~outstanding~~purpose ~~common stock~~ of organizing Marco Community Bank (the “Bank”) (MCBI and ~~Commercial~~the ~~Lending~~Bank ~~Capital~~are ~~Corp.~~collectively ~~(“CLCC”)~~referred ~~(collectively~~to ~~the~~as the “Company”). ~~The~~and ~~Holding Company’s~~purchasing ~~only~~100% ~~business~~of is the ~~ownership~~to-be-issued ~~and~~capital ~~operation~~stock of the Bank ~~and CLCC~~. The ~~Bank~~Company iswas aformed ~~Florida~~by ~~state-chartered~~a ~~commercial~~group ~~bank~~of ~~and~~Marco ~~its~~Island ~~deposits~~business ~~are~~leaders, ~~insured~~bank upexecutives, toand ~~the~~community ~~applicable~~leaders ~~limits~~who bybelieved ~~the~~that ~~Federal~~there ~~Deposit Insurance Corporation. CLCC~~ was ~~incorporated~~ toa ~~provide~~significant ~~commercial~~demand ~~loans~~for toa locally-owned ~~customers~~community ~~that would otherwise seek financing elsewhere because of credit limit constraints~~bank. ~~Effective December 31, 2008, CLCC’s operations were suspended due to economic conditions.~~

The ~~Company’s~~Bank ~~operating~~commenced ~~and~~business ~~capital~~operations ~~requirements~~on August 18, ~~the~~2003 ~~losses~~in ~~due~~a totemporary ~~recent~~facility ~~increases~~located inat ~~nonperforming~~1770 ~~loans~~San Marco ~~and~~Road, ~~declining~~Marco ~~net~~Island, ~~interest~~Florida. ~~margin~~Our ~~are factors~~permanent ~~management~~office ~~considered~~condominium ~~when~~facility ~~evaluating~~was completed at the ~~Company’s~~same ~~ability~~site toand ~~continue~~we ascommenced aoccupancy ~~going~~in ~~concern~~the third quarter of 2004.

~~Management is evaluating all potential sources of capital to meet the Company~~MCBI’s ~~capital~~other ~~requirements~~wholly-owned subsidiary, ~~including~~Commercial ~~entering~~Lending ~~into~~Capital ~~other~~Corp. ~~financing~~(“CLCC”) ~~arrangements~~(formerly ~~and/or~~MCB ~~strategic~~Commercial ~~alliances,~~Lending ~~and seeking recapitalization opportunities~~Corp.) ~~There~~was ~~can~~incorporated on ~~be no assurance~~October 22, ~~however~~2004, ~~that additional~~and ~~financing~~commenced ora ~~recapitalization~~commercial ~~plans~~lending ~~will~~brokerage bebusiness ~~available~~on ~~or forthcoming and~~November 8, if2004. ~~available,~~CLCC ~~can~~was beincorporated ~~obtained~~to orprovide ~~undertaken~~commercial onloans ~~terms favorable~~ to ~~the~~customers ~~Company~~that orwould ~~its~~otherwise ~~existing~~seek ~~shareholders.~~financing ~~Further~~elsewhere ~~there~~because isof nocredit ~~assurance that any acceptable~~limit ~~financing~~constraints. ~~alternative~~Effective ~~or recapitalization plan would be successfully implemented~~December 31, ~~or receive regulatory approval. However~~2008, ~~even~~CLCC’s ifoperations nowere ~~additional~~suspended ~~capital~~due ~~is obtained, management expects the Company~~ to beeconomic ~~adequately~~market ~~capitalized at September 30, 2010, based on detailed financial projections~~conditions.

~~The~~Regulatory ~~Company~~Action is exposed to the weakened real estate conditions in the Florida markets of Naples and Fort Myers. The Company believes the challenging market conditions are primarily attributable to a regional softening in demand for real estate assets as well as an oversupply of residential and commercial properties, particularly within the Company’s local markets. However, existing home sales by area Realtors have increased substantially during the last two quarters, and this decrement in existing real estate inventories, if sustained, may drive improvement in the regional economy during the coming year.

~~The~~On ~~September~~February 19, ~~2009~~2010, ~~report by~~ the ~~Regional~~Bank ~~Economic~~was ~~Research~~closed ~~Institute~~by ofthe Florida ~~Gulf~~Office ~~Coast~~of ~~University~~ Financial Regulation (~~http://www.fgcu.edu/cob/reri/indicators/indicators200909.pdf~~“OFR”) ~~noted~~and ~~that~~the ~~its~~Federal ~~regional~~Deposit ~~economic~~Insurance Corporation ~~indicators~~(the ~~continue~~“FDIC”) towas ~~show~~appointed ~~the~~as ~~impact~~receiver of the ~~slowdown~~Bank. inSubsequent ~~the~~to ~~local economy in~~ the ~~form~~closure, Mutual of ~~low~~Omaha ~~retail~~Bank, ~~sales~~Omaha, ~~high~~Nebraska ~~unemployment~~(“Mutual ~~rates,~~of ~~low permitting levels~~Omaha”), ~~and~~assumed ~~low~~all ~~inflation~~of ~~rates.~~the ~~Unemployment~~deposits inof the ~~Southwest Florida region reached 13.1 percent in July~~Bank, upand ~~from~~purchased ~~13.0~~essentially ~~percent~~all ~~in June. Tourism revenues, an important component~~ of the Bank’s ~~regional~~assets ~~economy,~~in ~~were~~a ~~down~~transaction ~~nearly~~facilitated 10by ~~percent from~~ the ~~prior year throughout the region~~FDIC. ~~Previous~~On ~~reports~~February 20, ~~noted~~2010, ~~that~~the ~~unemployment~~one ~~rates~~office ~~for~~of the ~~region~~Bank ~~have~~reopened ~~continued~~as toa ~~rise~~branch ~~and~~of itMutual isof ~~expected that unemployment levels will remain relatively high through 2010~~Omaha.

18The Company’s principal asset was the capital stock that it owns in the Bank, and, as a result of the closure of the Bank, the Company has minimal remaining tangible assets. The Company did not realize any recovery following the closing of the Bank and sale of its assets by the FDIC, nor is any recovery expected. Since the closing of the Bank, the principal assets of the Company are its office condominium, a participation in a loan receivable, and cash.

The Company is exploring methods of winding up its operations. Any ultimate distribution of assets will occur in accordance with Florida law, the Company’s Articles of Incorporation and the terms of the Company’s outstanding series of Preferred Stock.

The amounts presented in the Condensed Consolidated Statements of Operations (unaudited) in this report reflect the interim operations of the Bank from January 1, 2010 through the closure of the Bank by the FDIC on February 19, 2010, as a single line item gain (loss) from discontinued operations. Accordingly, the reader of this Form 10-Q should understand that this report was prepared to comply with the disclosures typically presented by a publicly-held bank and not be misled by the use of present tense language describing the operations of the Bank.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, ~~Continued~~(continued)

There are some positive indications for the regional economy in that existing home sales are continuing at higher levels reflecting more affordable price levels, and sales have increased substantially during the last two quarters. Single-family home permits issued have increased over that of the same quarter in the previous year, but as noted in the report, remained historically low for the region as a result of the economic recession and a large inventory of lower-priced existing homes which are selling below replacement costs.

In response to the general economic down turn, the Company has focused its lending resources upon nominal loan growth, while specifically addressing any asset challenges presented by its existing loan portfolios. Pricing of loans remains competitive with current lending initiatives focused primarily upon Marco Island opportunities.

Liquidity and Capital Resources

Liquidity

Liquidity management involves monitoring sources and uses of funds in order to meet day-to-day cash flow requirements while maximizing profits. Liquidity represents the ability of a company to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Asset liquidity is provided by cash and assets which are readily marketable, ~~which~~that can be pledged, or which will mature in the near future. Given the limited operations of the Company since the closure of the Bank, the need for liquidity management is also limited. The Company expects to meet its liquidity needs with existing cash on hand.

InCapital ~~addition~~Resources to deposits, within its geographic market place, the sources of funds available to the Banks for lending and other business purposes include loan repayments, sales of loans and securities, and contributions from the Holding Company. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are influenced significantly by competition, general interest rates and money market conditions. Borrowings may be used on a short-term basis to compensate for reductions in other sources, such as deposits at less than projected levels and may be used to fund the origination of mortgage loans designated to be sold in the secondary market.

~~At September 30,~~The ~~2009,~~Federal ~~the~~Reserve ~~Company~~Bank ~~had~~and noother ~~outstanding~~bank ~~borrowings~~regulatory ~~from~~agencies ~~any~~require ~~correspondent~~bank ~~Bank~~holding companies and ~~there~~financial ~~was~~institutions $7to maintain capital at adequate levels.0 ~~million~~These incapital ~~other~~requirements ~~available~~no ~~lines~~longer ~~from~~apply ~~correspondents~~to the Bank or the Company as a result of the Bank closure.

Management regularly reviews the Bank’s liquidity position and has implemented internal policies that establish guidelines for sources of asset-backed liquidity and limit the total amount of purchased funds used to support the balance sheet and funding from non-core sources.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued

Capital

The Federal Reserve Bank and other bank regulatory agencies require bank holding companies and financial institutions to maintain capital at adequate levels based on a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 100%. Under the risk-based standard, capital is classified into two tiers. Tier 1 capital consists of common stockholders’ equity, excluding the unrealized gain (loss) on available for sale securities, minus certain intangible assets. Tier 2 capital consists of the general allowance for credit losses subject to certain limitations. An institution’s qualifying capital base for purposes of its risk-based capital ratio consists of the sum of its Tier 1 and Tier 2 capital. Bank holding companies and banks are also required to maintain capital at a minimum level based on total average assets as defined by a leverage ratio.

Off-Balance Sheet Arrangements

The Company is not a party to financial instruments with off-balance-sheet risk ~~in the normal course of business to meet the financing needs of its customers~~. ~~These~~There ~~financial~~are ~~instruments~~no ~~include~~commitments ~~unused~~for ~~lines~~additional offunding ~~credit.~~for ~~These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of~~ the ~~amounts~~loan ~~recognized~~participation inowned ~~the~~by ~~condensed consolidated balance sheet. The contract or notional amounts of those instruments reflect~~ the ~~extent~~ ~~of the~~ Company’s ~~involvement~~at inJune 30, ~~particular classes of financial instruments~~2010.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for unused lines of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty.

Unused lines of credit typically result in loans with a market interest rate when funded.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued

A summary of the Company’s financial instruments with off-balance sheet risk at September 30, 2009, follows (in thousands):

	ContractAmount
Unused lines of credit	$	12,474
Performance standby letters of credit		—
	$	12,474

Management believes that the Company has adequate resources to fund all of its commitments.

Selected Ratios

The following table shows selected ratios for the periods ended or at the dates indicated:

	Nine MonthsEndedSeptember 30,2009		Year EndedDecember 31,2008		Nine MonthsEndedSeptember 30,2008
Average equity as a percentage of average assets	12.36	%	14.36	%	14.27	%
Total equity to total assets at end of period	10.76	%	13.61	%	14.75	%
Return on average assets (1)	(4.00	)%	(3.44	)%	(2.53	)%
Return on average common stockholders equity (1)	(52.26	)%	(32.14	)%	(23.00	)%
Noninterest expense to average assets (1)	5.31	%	3.59	%	3.89	%

(1) Annualized for the nine-months ended September 30, 2009 and 2008.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Results of Operations

~~The~~Selected ~~following~~ratios ~~table~~have ~~sets~~not ~~forth,~~been presented for the ~~periods~~three ~~indicated,~~and ~~information~~six ~~regarding~~months ~~(i)~~ended June ~~the~~30, ~~total~~2010. ~~dollar~~As ~~amount~~a ofresult ~~interest and dividend income~~ of the ~~Company~~ ~~from~~closure ~~interest-earning assets and the resultant average yields; (ii) the total dollar amount~~ of ~~interest expense on interest-bearing liabilities and~~ the ~~resultant~~Bank, ~~average~~limited ~~costs; (iii) net interest/dividend income;~~activity ~~(iv) interest-rate~~has ~~spread;~~been ~~and~~reported ~~(v) net~~for ~~interest~~the ~~margin.~~Company ~~Yields~~in ~~and costs were derived by dividing annualized income or expense by~~ the ~~average~~first ~~balance~~six months of ~~assets or liabilities, respectively, for the periods shown~~2010.

	Three Months Ended September 30,
	2009						2008
	AverageBalance		InterestandDividends		AverageYield/Cost		AverageBalance		InterestAndDividends		AverageYield/Cost
	($ in thousands)
Interest-earning assets:
Loans	$	109,465		1,415	5.13	%	$	110,609		1,648	5.91	%
Investment securities		11,486		90	3.11			10,823		133	4.88
Other interest-earning assets (1)		12,217		8	0.26			11,613		67	2.29
Total interest-earning assets		133,168		1,513	4.51			133,045		1,848	5.51
Noninterest-earning assets		9,685						6,515
Total assets	$	142,853					$	139,560
Interest-bearing liabilities:
Savings		27,742		127	1.82			7,854		40	2.02
Money market and NOW deposits		38,299		117	1.21			29,251		132	1.79
Time deposits		55,890		466	3.31			76,440		779	4.04
Total interest-bearing deposits		121,931		710	2.31			113,545		951	3.32
Repurchase agreements		147		1	2.70			1,050		7	2.64
Total interest-bearing liabilities		122,078		711	2.31			114,595		958	3.32
Noninterest-bearing liabilities		5,902						4,625
Stockholders’ equity		14,873						20,340
Total liabilities and stockholders’ equity	$	142,853					$	139,560
Net interest income			$	802					$	890
Interest-rate spread (2)					2.20	%					2.19	%
Net interest-earning assets, net margin (3)	$	11,090			2.39	%	$	18,450			2.65	%
Ratio of interest-earning assets to interest-bearing liabilities		1.09						1.16

A table for the three and six months ended June 30, 2009, presenting (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average costs; (iii) net interest/dividend income; (iv) interest-rate spread; and (v) net interest margin can be found in the Company’s Form 10-Q for the quarter ended June 30, 2009. A comparable table is not included in this report as the Bank’s activity through its closure is reported as a single line item (gain (loss) from discontinued operations) in the accompanying condensed consolidated financial statements, and is not meaningful to the reader.

~~(1)~~Analysis ~~Includes~~of ~~interest-earning~~the ~~deposits,~~Three ~~federal~~Months ~~funds~~Ended ~~sold~~June 30, ~~Federal~~2010 ~~Reserve Bank stock~~ and ~~Federal~~2009 ~~Home Loan Bank stock.~~

~~(2)~~Net ~~Interest-rate~~loss ~~spread~~for ~~represents~~ the ~~difference~~three ~~between~~months ~~the~~ended ~~average~~June 30, ~~yield~~2010, onwas ~~interest-earning~~$48,000 ~~assets~~as ~~and~~compared ~~the~~to ~~average~~a ~~cost~~net loss of ~~interest-bearing~~$2,679,000 ~~liabilities~~for the three months ended June 30, 2009. The major components of net loss were as follows:

~~(3)~~• ~~Net~~A ~~interest~~loss ~~margin~~on isthe ~~annualized~~discontinued ~~net~~operations ~~interest~~of ~~income~~$2,650,000 ~~divided~~in by2009 ~~average~~as ~~interest-earning~~compared ~~assets~~to no gain or loss in 2010. As noted previously, the results of operations for the three months ended June 30, 2010 and 2009, reflect the results of the Bank reported as discontinued operations.

22• Interest income of $(10,000) and $59,000 for the three months ended June 30, 2010 and 2009, respectively, on the loan participation held by the Company, which became a nonaccrual loan during the second quarter of 2010. The decline in interest income of $69,000 was due to reductions in the principal balance of the loan and all accrued interest was reversed during the quarter ended June 30, 2010, which resulted in a net reduction in interest income of $10,000.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

~~The~~Item ~~following~~2. ~~table~~Management’s ~~sets~~Discussion ~~forth, for the periods indicated, information regarding (i) the total dollar amount of interest~~ and ~~dividend~~Analysis ~~income~~ of ~~the~~Financial ~~Company~~Condition ~~from interest-earning assets~~ and ~~the~~Results ~~resultant average yields; (ii) the total dollar amount~~ of ~~interest~~Operations ~~expense on interest-bearing liabilities and the resultant average costs;~~ (~~iii~~continued) net interest/dividend income; (iv) interest-rate spread; and (v) net interest margin. Yields and costs were derived by dividing annualized income or expense by the average balance of assets or liabilities, respectively, for the periods shown.

	Nine Months Ended September 30,
	2009						2008
	AverageBalance		InterestandDividends		AverageYield/Cost		AverageBalance		InterestAndDividends		AverageYield/Cost
	($ in thousands)
Interest-earning assets:
Loans	$	115,247		4,578	5.31	%	$	116,996		5,497	6.26	%
Investment securities		9,525		253	3.55			8,832		334	5.04
Other interest-earning assets (1)		7,273		23	0.42			17,518		339	2.58
Total interest-earning assets		132,045		4,854	4.91			143,346		6,170	5.73
Noninterest-earning assets		11,537						8,202
Total assets	$	143,582					$	151,548
Interest-bearing liabilities:
Savings		16,488		221	1.79			9,278		139	2.00
Money market and NOW deposits		36,137		344	1.27			30,730		412	1.79
Time deposits		66,702		1,766	3.54			83,407		2,791	4.46
Total interest-bearing deposits		119,327		2,331	2.61			123,415		3,342	3.61
Repurchase agreements		426		5	1.57			986		23	3.11
Total interest-bearing liabilities		119,753		2,336	2.61			124,401		3,365	3.60
Noninterest-bearing liabilities		6,605						5,522
Stockholders’ equity		17,224						21,625
Total liabilities and stockholders’ equity	$	143,582					$	151,548
Net interest income			$	2,518					$	2,805
Interest-rate spread (2)					2.30	%					2.13	%
Net interest-earning assets, net margin (3)	$	12,292			2.55	%	$	18,945			2.61	%
Ratio of interest-earning assets to interest-bearing liabilities		1.10						1.15

•

Noninterest expenses of $38,000 in 2010 and $105,000 in 2009. The second quarter of 2009 included share-based compensation expense of $55,000.

~~(1)~~• ~~Includes~~Income ~~interest-earning~~tax ~~deposits,~~benefit ~~federal~~of ~~funds sold~~$17,000 ~~Federal~~was ~~Reserve~~recognized ~~Bank~~in ~~stock~~2009 ~~and~~versus ~~Federal~~$-0- ~~Home~~in ~~Loan Bank stock~~2010.

~~(2)~~Analysis ~~Interest-rate~~of ~~spread represents~~ the ~~difference~~Six ~~between~~Months ~~the~~Ended ~~average~~June 30, ~~yield~~2010 ~~on interest-earning assets~~ and ~~the~~2009 ~~average cost of interest-bearing liabilities.~~

~~(3)~~ Net ~~interest~~income ~~margin~~for isthe ~~annualized~~six months ended June 30, 2010, was $587,000 as compared to a net ~~interest~~loss ~~income~~of ~~divided~~$2,888,000 byfor ~~average~~the ~~interest-earning~~six ~~assets~~months ended June 30, 2009. The major components of net income were as follows:

23• A gain on the discontinued operations of $1,173,000 in 2010 as compared to a loss of $2,851,000 in 2009. As noted previously, the results of operations for the six months ended June 30, 2010 and 2009, reflect the results of the Bank reported as discontinued operations. The gain in 2010 was the result of the discontinued Bank’s liabilities exceeding the assets as follows (in thousands):


Total liabilities	$	117,294
Less total assets		(116,238	)

		1,056
Net change in unrealized holding gains on securities		118
Rounding		(1	)


	$	1,173

•

Interest income of $27,000 and $112,000 for the six months ended June 30, 2010 and 2009, respectively, on the loan participation held by the Company. The decline in interest income of $69,000 was due to reductions in the principal balance of the loan and all accrued interest was reversed during the quarter ended June 30, 2010, which resulted in a net reduction of $10,000.

•

An additional provision for loan losses of $125,000 was recorded in 2010 on the participation loan receivable. No provision for loan losses was recorded in 2009.

•

An impairment charge to operations of premises and equipment of $385,000 in 2010. There was no such charge in 2009.

•

Noninterest expenses of $103,000 in 2010 and $171,000 in 2009. The six months ended June 30, 2009, included share-based compensation expenses of $55,000.

•

Income tax benefit of $22,000 in 2009 versus $-0- in 2010.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Comparison of the Three-Month Periods Ended September 30, 2009 and 2008

General. Net losses for the three-months ended September 30, 2009 were $1.4 million or a net loss of $0.43 per basic and diluted common share compared to a net loss of $564,000 or a net loss of $0.17 per basic and diluted common share for the three-months ended September 30, 2008. The increase in net loss is primarily due to the writedowns on real estate owned of $1,662,000 and losses on the sale of real estate owned of $164,000.

Interest Income and Expense. Interest income totaled $1.5 million for the three-months ended September 30, 2009 compared to $1.8 million for the three-months ended September 30, 2008. Interest income on loans decreased $233,000 due to lower yields in the portfolio and a lower balance of interest-earning assets.

Interest expense decreased to $711,000 for the three-months ended September 30, 2009 compared to $958,000, for the three-months ended September 30, 2008. Interest expense decreased primarily due to a decrease in the weighted average interest rate paid on deposits, which was somewhat offset by an increase in the balance of interest bearing liabilities.

Provision for Loan Losses. The provision for loan losses is determined based on management’s estimates of the appropriate level of allowance for loan losses needed to absorb probable losses inherent in the existing loan portfolio, after giving consideration to charge-offs and recoveries for the period.

The provision for loan losses was $49,000 for the three-months ended September 30, 2009 compared to $150,000 for the nine-months ended September 30, 2008. The allowance for loan losses is $1.9 million at September 30, 2009.

Real estate loans continue to be the primary source of loan charge-offs. The Company charged-off $4.5 million during the three-month period ended September 30, 2009, compared to $531,000 during the comparable 2008 period.

While management believes that its allowance for loan losses is adequate as of September 30, 2009, future adjustments to the Company’s allowance for loan losses may be necessary if economic conditions differ substantially from the assumptions used in making the initial determination.

Noninterest Income. Noninterest income increased to $107,000 during the three-month period ended September 30, 2009 compared to $75,000 for the same period in 2008 primarily due to an increase in the gain on sale of residential mortgage loans.

Noninterest Expenses. Noninterest expenses increased to $3.1 million during the three-month period ended September 30, 2009 compared to $1.6 million for the same period in 2008. Noninterest expense increased primarily due to an increase in writedowns on other real estate owned, losses on sale of other real estate and regulatory assessments.

Income Taxes. The Company recorded an income tax benefit of $858,000 for the three-month period ended September 30, 2009 (an effective rate of 37.6%) compared to an income tax benefit of $299,000 for the 2008 period (an effective rate of 37.7%).

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Comparison of the Nine-Month Periods Ended September 30, 2009 and 2008

General. Net losses for the nine-months ended September 30, 2009 were $4.3 million or a net loss of $1.35 per basic and diluted common share compared to a net loss of $3.1 million or a net loss of $0.96 per basic and diluted common share for the nine-months ended September 30, 2008.

Interest Income and Expense. Interest income decreased to $4.9 million for the nine-months ended September 30, 2009 from $6.2 million for the nine-months ended September 30, 2008. Interest income decreased primarily due to lower yields and a lower balance of interest-earning assets.

Interest expense decreased to $2.3 million for the nine-months ended September 30, 2009 compared to $3.4 million, for the nine-months ended September 30, 2008. Interest expense decreased due to a decrease in the average balance of deposits in 2009 and a decrease in the weighted average interest rate paid on deposits.

Provision for Loan Losses. The provision for loan losses is determined based upon management’s estimates of the appropriate level of allowance for loan losses needed to absorb probable losses inherent in the existing loan portfolio, after giving consideration to charge-offs and recoveries during the period.

The provision for loan losses was $4.3 million for the nine-months ended September 30, 2009, compared to $3.2 million for the nine-months ended September 30, 2008. The Company wrote down $4.3 million in impaired loans reducing the balance of allowance for loan losses to $1.9 million at September 30, 2009. The primary reason for the increase in provision and the decrease in allowance resulted from a review of the collectability of nonperforming loans in the Bank’s portfolio, and the subsequent decision to write-off as losses certain assets for which there existed a diminished probability of collection.

Real estate loans continue to be the primary source of loan charge-offs. The Company charged-off $8.9 million for the nine-month period ended September 30, 2009, compared to $1.3 million for the comparable 2008 period.

Noninterest Income. Noninterest income increased to $600,000 during the nine-month period ended September 30, 2009 compared to $165,000 for the same period in 2008 primarily due to an increase in the gain on sale of residential mortgage loans.

Noninterest Expenses. Noninterest expenses increased to $5.7 million during the nine-month period ended September 30, 2009 compared to $4.4 million for the same period in 2008. Noninterest expense increased primarily due to an increase in writedowns on other real estate owned, losses on sale of other real estate owned and the increased regulatory assessments which was somewhat offset by a decrease in salaries and employee benefits, professional fees and other real estate owned expense.

Income Taxes. The Company recorded an income tax benefit of $2.6 million for the nine-month period ended September 30, 2009 (an effective rate of 37.6%) compared to an income tax benefit of $1.7 million for the 2008 period (an effective rate of 37.6%).

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 4.

Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

We maintain controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon management’s evaluation of those controls and procedures performed within the 90 days preceding the filing of this Report, our Principal Executive Officer and Principal Financial Officer concluded that, subject to the limitations noted below, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms.

(b) Changes in Internal Controls

We have made no significant changes in our internal controls over financial reporting during the quarter ended ~~September~~June 30, ~~2009~~2010, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

(c) Limitations on the Effectiveness of Controls

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

On ~~Thursday,~~ August 22, 2008, ~~Marco Community Bancorp, Inc’s (~~the ~~“Company”) wholly owned subsidiary, Marco Community~~ Bank ~~(the “Bank”)~~, instituted an action (Marco Community Bank v. Atlantic Capital Associates, Inc., Florida Capital Bank N.A. and Allen C. Ewing & Co., Case No. ~~08-6362 CA~~086362CA) in the Circuit Court of the Twentieth Judicial Circuit in and for Collier County, Florida against each of Atlantic Capital Assoc., Inc. (“ACA”), Florida Capital Bank, N.A. (“FCB”) and Allen C. Ewing & Co. (“Ewing” and collectively with ACA and FCB, the “Defendants”).

Specifically, the Bank ~~alleges~~alleged that ACA, the loan originator, loan servicer, lender, and underwriter, along with its agents, FCB and Ewing, failed to underwrite mortgage loans in conformity with their own offering documents, servicing agreements and industry standards. In addition, the Bank ~~alleges~~alleged that the Defendants also failed to perform as required under their agreements with the ~~Bank~~bank and that all of these failures and conflicts led up to the issuance of loan pools, which were impaired securities founded on material misstatements and omissions in the offering documents, servicing agreements and other material documents delivered in connection with the ~~purchases~~purchase ~~by the Bank~~ of these loan pools by the Bank.

~~The~~As ~~Bank~~a ~~has~~result ~~instituted~~of the ~~action~~Bank ~~alleging~~being ~~violations~~closed ofand the FDIC ~~Florida~~being ~~Securities~~appointed ~~and~~as ~~Investor~~receiver ~~Protection Act, breach~~ of ~~contract~~the ~~and negligence. The~~ Bank, isthe ~~seeking~~FDIC toreplaced ~~recover~~the ~~damages~~Bank ~~sustained,~~as ~~pre-judgment~~the ~~interest,~~Plaintiff ~~attorney’s fees and costs~~ in ~~connection~~this ~~with~~case. ~~its~~The ~~purchase~~Company ofno ~~more~~longer ~~than~~has ~~$19~~an ~~million~~interest ofin ~~loan~~this ~~pools~~litigation ~~from~~or ~~the~~its ~~Defendants~~outcome.

The court recently ruled that the lawsuit against Florida Capital Bank may not be maintained and entered an order dismissing the case. Marco Community Bank is considering whether to appeal that order. As to the remaining two defendants, the case continues to proceed.

Item 5.

Other Information

~~None~~On September 17, 2010, the Board of Directors of the Company met and adopted an amendment to the Bylaws of the Company which extends the time that a record date for a meeting may be set before the meeting by 10 additional days, in order to fully utilize the time period established under Florida law. A copy of the amendment is shown at Exhibit 3.5 to this Report.

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

Item 6.

Exhibits

(a)	*Exhibits*

The exhibits denominated with (a) were filed with the Company’s Form SB-2 which was filed with the Securities and Exchange Commission on March 7, 2003, those denominated with (b) were filed with the Company’s Form 10-Q which was filed with the Securities and Exchange Commission on August 14, 2007, those denominated with (c) were filed with the Company’s Form 10-K which was filed with the Securities and Exchange Commission on March 19, 2008, those denominated with (d) were filed with the Company’s Definitive Schedules 14-A which was filed with the Securities and Exchange Commission on March 21, 2007 and March 20, 2008 and those denominated with (e) were file with the Company’s Form 10-K which was filed with the Securities and Exchange Commission on March 31, 2009.

Exhibit No.		Description of Exhibit
(a) 3.1		Articles of Incorporation of Marco Community Bancorp, Inc. as filed with the Florida Department of State
(a) 3.2		Bylaws of Marco Community Bancorp, Inc.
(e) 3.3		Articles of Amendment to the Articles of Incorporation
(e) 3.4		Articles of Amendment to the Articles of Incorporation
(a) 4.1		Specimen Common Stock Certificate
(d) 10.1		Employees’ Stock Option Plan, as amended
(d) 10.2		Directors’ Stock Option Plan, as amended
(d) 10.3		Advisory Directors’ Stock Option Plan, as amended
(b) 10.8		Written Agreement with the Federal Reserve Bank of Atlanta and the Florida Office of Financial Regulation
31.1		Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act
31.2		Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002

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MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES



(e) 3.4		Articles of Amendment to the Articles of Incorporation

3.5		Amendment to the Bylaws of Marco Community Bancorp, Inc., dated September 17, 2010

(a) 4.1		Specimen Common Stock Certificate

(d) 10.1		Employees’ Stock Option Plan, as amended

(d) 10.2		Directors’ Stock Option Plan, as amended

(d) 10.3		Advisory Directors’ Stock Option Plan, as amended

(b) 10.8		Written Agreement with the Federal Reserve Bank of Atlanta and the Florida Office of Financial Regulation

31.1		Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act

31.2		Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002

MARCO COMMUNITY BANCORP, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MARCO COMMUNITY BANCORP, INC.
	(Registrant)
Date: November 10, 2009	By:	/S/ RICHARD STORM, JR.
Date: September 27, 2010	By:	/S/ RICHARD STORM, JR.
		Richard Storm, Jr., Principal Executive Officer
Date: November 10, 2009	By:	/S/ THOMAS J. MITCHUSSON
Date: September 27, 2010	By:	/S/ E. TERRY SKONE
		Thomas J. Mitchusson, Senior Vice President and Principal Financial Officer
		E. Terry Skone
		Acting Principal Financial Officer

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